Trader: I want to ask about the requirements for professional trading client status?
could you explain a bit more about the £500k requirement?
GBG: Hi. In what capacity? Risk capital or trade size?
Trader: ESMA rules state that one of the requirements to trade binary options is that one must have £500k…can this a total of all the trades I have staked in binary options over the years?
GBG: We don’t recommend binary options, but the EUR 500,000 for elective professionals refers to the size of your investment portfolio – not the value of executed trades.
You can see more information on the FCA handbook here: https://www.handbook.fca.org.uk/handbook/COBS/3/5.html#D182 (COBS 3.5.3) or the ESMA Q&A here: https://www.esma.europa.eu/system/files_force/library/esma35-43-349_mifid_ii_qas_on_investor_protection_topics.pdf (Question 6)
Trader: please can you explain what you mean by investment portfolio
GBG: That would be the combination of you investments across stocks, bonds, derivatives (net equity) etc.
Trader: incl. property?
GBG: Not normally, no. It would probably refer to liquid assets.
Trader: ok thank you for your thoughts
GBG: You’re welcome…
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.